Decline in Global Gas Production
While the crude oil market has managed to discount further delays in recovery of US and European energy demand, we wonder if that capacity is about to run out. In fact, we see softer US data, further delays in US stimulus checks, a rising Dollar and signs that China might be poised stem rising industrial material prices as a bearish cloud hanging over an overbought market.
With a slightly warmer US temperature forecast and a report that despite a decline in global gas production of 3.6%, consumption failed to prevent a net build in supply. In fact, the forecast from Oslo indicated that global gas demand fell by 2.5% and therefore the bull camp is facing ideas that without a quick recovery outside of China or without extreme and entrenched cold weather in the US and Europe, prices are likely to be limited under the $2.75 level.
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